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IAS 16 depreciation

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › IAS 16 depreciation

  • This topic has 5 replies, 2 voices, and was last updated 4 years ago by P2-D2.
Viewing 6 posts - 1 through 6 (of 6 total)
  • Author
    Posts
  • July 27, 2020 at 7:28 am #578147
    Divyasri
    Member
    • Topics: 4
    • Replies: 6
    • ☆

    Hi Tutor,
    Question 3 form chapter 5 of open tuition material:
    PPE bought on 1 Jan 2012 for 25 million
    Useful life – 10 yrs
    On Dec 2014 remaining life was estimated as 5 years.
    Ans:SFP- 14000 and SPL- 3500
    Excess depreciation-
    2500( calculated using previous fig)
    (3500)
    ———–
    1000- will this amount be deducted from retained earnings and 2500 will be charged to SPl, or entire amount will be charged to (3500) SPL
    Thanks

    July 27, 2020 at 8:09 pm #578330
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 7163
    • ☆☆☆☆☆

    Hi,

    The 3,500 is charged in full through profit or loss. The 1,000 is a reserve transfer through the statement of changes in equity that will reduce the retained earnings.

    Thanks

    July 28, 2020 at 5:41 am #578438
    Divyasri
    Member
    • Topics: 4
    • Replies: 6
    • ☆

    Thanks for your reply tutor,

    Dr Depreciation. 3500
    Cr Accumulated depreciation (SPL) 3500

    Dr Revaluation reserve 1000
    Cr Retained earnings. 1000

    Is this entry right?

    Also in open tuition material answer ,
    in SFP only PPE – 14000 is shown
    Should we also mention
    Retained earnings- 1000(in SFP)

    August 1, 2020 at 7:28 am #578883
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 7163
    • ☆☆☆☆☆

    You’re welcome. Yes, your double entries are correct, however I’d not show the figure you state in the SFP extract. There is too much happening in retained earnings to show the figure.

    August 1, 2020 at 5:19 pm #578925
    Divyasri
    Member
    • Topics: 4
    • Replies: 6
    • ☆

    Thank you tutor

    August 8, 2020 at 8:05 am #579598
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 7163
    • ☆☆☆☆☆

    You’re welcome

  • Author
    Posts
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